7-1-27,
    a.
    
    that the scheme of arrangement as approved by the shareholders of the
petitioner company, a copy of which is filed hereto as
Annexure-D, be sanctioned and
confirmed by this Honble High Court so as to be binding on all the members, creditors
and employees of the Petitioner Company and all concerned.b.
    
    For an order under section 394 of the Act that the petitioner Company do within
30 days after the date of the orders, cause a
certified copy to be delivered to the Registrar of Companies,
Andhra Pradesh, Hyderabad, for registration on such certified copy being delivered or
such date as this Honble High Court may deem, fit the Registrar of Companies, Andhra
Pradesh, Hyderabad shall take all necessary consequential action in respect of the
Petitioner company.c.
    
    That the parties of the Scheme or other persons interested shall be at liberty
to apply to this Honble Court for any direction that may be necessary in regard to the
carrying out of the Scheme of arrangement and
 Sri.V.S. Suresh,




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HONBLE
SRI JUSTICE G.V. SEETHAPATHY
 C.P.No. 102
OF 2010
 ORDER
   24-02-1984. 06-12-1985 Rs.84,42,27,925/-,




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GVS, J
C.P.No.102 OF 2010
 
     2




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GVS, J
C.P.No.102 OF 2010
 
    3




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GVS, J
C.P.No.102 OF 2010
 
     4




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GVS, J
C.P.No.102 OF 2010
 
  
    1.
    
    Sri.V.S. Suresh, Company
Secretary, Dr. Reddys Laboratories Limited, Registered
Officer at 7-1-27, Ameerpet, Hyderabad A.P. Hyderabad 500 016.2.
    
    The Regional Director,
Ministry of Corporate Affairs, Shastri Bhavan,
Chennai.3.
    
    The Registrar of Companies, 3-5-398, C.P.W.D.Building, Kendriya
Sadan, Sultan Bazar, Koti, Hyderabad.4.
    
    The Official Liquidator, Kendriya Sadan, 3-5-398, C.P.W.D.Building, Sultan Bazar, Koti, Hyderabad.5.
    
    One Copy to Sri.V.S. Raju, Advocate, (OPUC)6.
    
    Two CD Copies7.
    
    One CC to Sri. Ponnam Ashok
Goud, Advocate(OPUC)
  
  5




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Ordering the Company Petition without costs.
    
    (SEAL)




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a.
    
    that the scheme of arrangement as approved by the shareholders of the petitioner
company, a copy of which is filed hereto as Annexure-D, be sanctioned and confirmed by
this Honble High Court so as to be binding on all the members, creditors and employees of
the Petitioner Company and all concerned.b.
    
    For an order under section 394 of the Act that the petitioner Company do within 30
days after the date of the orders, cause a certified copy to be delivered to the Registrar
of Companies, Andhra Pradesh, Hyderabad, for registration on such certified copy being
delivered or such date as this Honble High Court may deem, fit the

Registrar of
Companies, Andhra

Pradesh, Hyderabad shall take all necessary consequential
action in respect of the Petitioner company.c.
    
    That the parties of the Scheme or other persons interested shall be at liberty to
apply to this Honble Court for any direction that may be necessary in regard to the
carrying out of the Scheme of arrangement and




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Order Under Section 394
  THIS COURT DOTH ORDER
 1.
    
    That this court doth hereby sanction the scheme of arrangement as approved by the
shareholders of the Petitioner Company a copy is filed hereto as Annexure D be and
hereby is sanctioned and confirmed and doth hereby declare the same to be binding on all
the members creditors and employees of the petitioner company and all concerned
the Petitioner Company Viz., Dr. Reddys Laboratories Limited and its Members, and
that the Scheme of Arrangement envisaging restructuring of the general reserve by issuing
unsecured, redeemable, non-convertible, fully paid up bonus debentures to its members be
and hereby is sanctioned2.
    
    That all the property, rights and powers of the Petitioner Company
specified in the first, second and third parts of the schedule hereto and all other
property, rights and powers of the Petitioner Company and its members for issue of
unsecured redeemable non-convertible fully paid bonus debentures from general reserve and
accordingly the same shall pursuant to section 394(2) of the companies Act, 1956,3.
    
    That the Petitioner Company do without further application issue to such members of
the Petitioner Company as have not given such notice of dissent as is required by
clause 21 of the arrangement herein the debentures to its members Company to which they
are entitled under the said arrangement.4.
    
    That the Petitioner Company do within 30 days receipt of a copy of this Order cause a
certified copy of this order to be delivered to the Registrar of Companies for
registration; and consequential action5.
    
    That any person interested shall be at liberty to apply to the court in the above
matter for any directions that may be necessary
 SCHEDULE
PART  1
  PART  II
  PART
 III




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TH
        1.
    
    Sri.V.S. Suresh, Company
Secretary, Dr. Reddys Laboratories Limited,
Registered Officer at 7-1-27, Ameerpet, Hyderabad A.P., Hyderabad 500 016.2.
    
    The Registrar of Companies, 3-5-398, C.P.W.D. Building, Kendriya
Sadan, Sultan Bazar, Koti, Hyderabad.3.
    
    The Official Liquidator, Kendriya Sadan, 3-5-398, C.P.W.D.
Building, Sultan Bazar, Koti, Hyderabad.4.
    
    One Copy to the Section Officer, O.S. Section, High Court of A.P.,
Hyderabad.5.
    
    Two CD Copies6.
    
    The Regional Director, Company Law Board, Southern Region, Chennai.




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SCHEME OF ARRANGEMENT
 BETWEEN
 DR. REDDYS LABORATORIES LIMITED
 AND
 ITS MEMBERS
 FOR ISSUE OF UNSECURED REDEEMABLE NON-CONVERTIBLE FULLY
PAID BONUS DEBENTURES FROM GENERAL RESERVE
 PART I  GENERAL
 1.
    
    INTRODUCTION1.1
    
    Dr. Reddys Laboratories Limited is a public limited company incorporated under the Act (as
defined hereinafter) and having its registered office at 7-1-27, Ameerpet, Hyderabad, Andhra
Pradesh  500 016 (the Company).The Company is primarily engaged in the business of
manufacture and sale of chemicals, drugs, pharmaceuticals and other intermediaries.1.2
    
    Over the last few years, the Company has built up significant reserves from its retained
profits by transfer to its General Reserve. The capital represented by its General Reserve is
in excess of the Companys current and anticipated operational needs. Further, barring
unforeseen circumstances, the Company expects that its business operations will continue on a
high growth trajectory and generate incremental cash over the next few years.1.3
    
    While the excess reserves can be profitably utilized for the Companys overall growth
strategy, the Company believes that even after considering the foreseeable investments
required for such opportunities over the next few years, its reserves as aforesaid will be in
surplus to its needs. The Company also has significant debt raising capacity.1.4
    
    Separately, the Company has recently completed 25 years and is keen to reward its members for
their support and belief.1.5
    
    In view of the aforesaid factors, the Company has concluded that it can optimally utilize its
surplus reserves by giving its members access to the same. Accordingly, the Company has
proposed to restructure its General
Reserve by issuing Debentures (as defined below in Clause 2.1) to its members. In the interests
of transparency and good corporate governance and by way of abundant caution, the Company has
determined to propose this scheme of arrangement between the Company and its Members under
Sections 391-394 of the Act, which will be subject to necessary approvals of the shareholders
and the High Court (as defined hereinafter).
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  1




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1.6
    
    Accordingly, this Scheme provides for the issue of the Debentures to the Members by
restructuring the General Reserves of the Company pursuant to Sections 391 to 394 and other
relevant provisions of the Act, and various other matters consequential to or otherwise
integrally connected with the above in the manner provided for in the Scheme.1.7
    
    The Scheme is divided into the following parts:
 (a)
    
    Part I,which deals with the introduction and definitions;(b)
    
    Part II,which deals with the issuance of the Debentures; and(c)
    
    Part III,which deals with the general terms and conditions.
 2.
    
    DEFINITIONS AND INTERPRETATION2.1
    
    In this Scheme, unless inconsistent with the subject or context, the following expressions
shall have the following meanings:Actmeans the Companies Act, 1956.ADRsmeans the outstanding American Depositary Receipts issued by the Company pursuant to
the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993 and other applicable law, and where relevant shall include
the underlying equity shares relating thereto.Boardmeans the board of directors of the Company and shall include a committee duly
constituted and authorised by the board of directors for the purposes of matters pertaining
to the bonus issuance, the Scheme and/or any other matter relating thereto.Capital Reservesmeans and includes the capital reserve and the securities premium account
as reflected in the accounts of the Company.Debenturesmeans unsecured redeemable, non-convertible, fully paid up bonus debentures of
the Company of face value of Rs. 5/- (Rupees Five Only) each proposed to be issued pursuant to the
present Scheme, the principal terms and conditions for which have been set out in Annexure I
to this Scheme.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  2




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Depositary
Agreementmeans the Deposit Agreement dated April 10, 2001 between the Company, the
Depositary and the holders of the ADRs.Depositarymeans JP Morgan Chase Bank, N.A..Effective Datemeans the last of the dates on which all the conditions and matters
referred to in Clause 11 of this Scheme occur or have been fulfilled or waived in
accordance with this Scheme. References in this Scheme to date of coming into effect of
the Scheme or effectiveness of the Scheme shall mean the Effective Date.General Reservemeans the general reserve of the Company which has been built through
retained undistributed profits and which forms a part of the revenue reserves of the
Company, as reflected in the accounts of the Company.High Courtshall mean the High Court of Andhra Pradesh having jurisdiction in relation to
the Company and shall include the National Company Law Tribunal, as applicable or such
other forum or authority as may be vested with any of the powers of a High Court under the
Act.Member (s)means the equity shareholder (s) of the Company as on the Record Date.Record Datemeans the date to be fixed by the Board for the purpose of determining the
equity shareholders of the Company to whom the Debentures will be allotted pursuant to this
Scheme.Registrar of Companiesmeans the Registrar of Companies, Andhra Pradesh.Schememeans this Scheme of Arrangement, including the annexures, in its present form or
with any modification(s) approved or imposed or directed by the High Court or any other
authority or otherwise effected by the Board.Stock Option Scheme 2002means the Dr. Reddys Employees Stock Option Scheme, 2002.Stock Option Scheme 2007means the Dr. Reddys Employees ADR Stock Option Scheme, 2007.Working Daymeans a day on which commercial banks are open for business in Mumbai,
India, Hyderabad, India and New York, New York.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  3




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2.2
    
    All terms and words used but not defined in this Scheme shall, unless
repugnant or contrary to the context or meaning thereof, have the same meaning ascribed to them
under the Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 and
other applicable laws, rules, regulations, bye-laws, as the case may
be or any statutory modification or re-enactment thereof for the time being in force.2.3
    
    References to clauses, recitals and annexures, unless otherwise provided,
are to clauses, recitals and annexures of and to this Scheme.2.4
    
    The headings herein shall not affect the construction of this Scheme.2.5
    
    The singular shall include the plural and vice versa; and references to one gender include
all genders.2.6
    
    Any phrase introduced by the terms including, include, in particular or any similar
expression shall be construed as illustrative and shall not limit the sense of the words
preceding those terms.2.7
    
    References to person include any individual, firm, body corporate (whether or not
incorporated), government, state or agency of a state or any joint venture, association and
partnership.2.8
    
    The Annexures to this Scheme form an integral and inseparable part of this Scheme.3.
    
    SHARE CAPITAL AND GENERAL RESERVE3.1
    
    The share capital structure of the Company as on December 31, 2009 is as under:
 A. Authorised Share Capital
    
    Amount in Rs.24,00,00,000 equity shares of Rs. 5/- (Rupees Five Only) each
    
    
    1,20,00,00,000/-Total
    
    
    1,20,00,00,000/-
 B. Issued Share Capital
    
    Amount in Rs.16,88,25,235 equity shares of Rs. 5/- (Rupees Five Only) each *
    
    
    84,41,26,175/-Total
    
    
    84,41,26,175/-
 C. Subscribed & Paid-up Share Capital
    
    Amount in Rs.16,88,25,035 equity shares of Rs. 5/- (Rupees Five Only) each fully paid up*#
    
    
    84,41,25,175/-Total
    
    
    84,41,25,175/-
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  4




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*
    
    As on December 31,
2009, includes 2,49,43,067 equity shares of Rs. 5/- (Rupees Five Only)
represented by 2,49,43,067 ADRs issued by the Company. The ADRs of the Company are listed on
the New York Stock Exchange.#
    
    200 equity shares of the face value of Rs. 5/- (Rupees Five Only) each have been
forfeited by the Company for non-payment of calls. The Company has outstanding employee stock options under the Stock Option Scheme, 2002 and
the Stock Option Scheme, 2007, the exercise of which may result in an increase in the issued
and paid-up share capital of the Company on or prior to the Record Date.3.2
    
    The General Reserve of the
Company as per the audited balance sheet of  the Company on March
31, 2009 stood at Rs. 13,17,30,00,000/- (Rupees One Thousand Three Hundred Seventeen Crores
Thirty Lakhs Only).
 PART II  ISSUANCE OF BONUS DEBENTURES
 4.
    
    Issue of Debentures From General Reserve4.1
    
    The provisions of this Clause 4 of this Scheme shall operate notwithstanding anything to the
contrary in this Scheme or in any other instrument, deed or writing.4.2
    
    Upon the effectiveness of the Scheme, the Company shall issue and allot out of its General
Reserve by way of distribution as bonus, to each Member whose name is recorded in the Register
of Members and records of the depositary as Members of the Company on the Record Date,
Debentures in the ratio of 6 Debentures of face value Rs. 5/- (Rupees Five Only) each fully
paid up in the Company for every equity share of Rs. 5/- (Rupees Five Only) each fully paid up
held by such Member in the manner hereafter provided. The process for issuance of Debentures
will be as set out in Clause 6 hereunder.4.3
    
    The issuance of Debentures pursuant to this Scheme above will constitute Deemed Dividend as
defined in Section 2(22)(b) of the Income Tax Act, 1961 and consequently the Company will be
required to pay Dividend Distribution Tax (DDT) at the applicable rate on the aggregate value
of Debentures allotted to Members as bonus Debentures. However, such issue of Debentures in
the manner contemplated herein will not entail declaration or distribution of any dividend for
the purposes of Sections 205 and 205A of the Act.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  5




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4.4
    
    No Debentures will be issued under this Scheme in respect of any equity shares of the Company that
have been forfeited. The issuance of Debentures pursuant to this
Scheme in respect of any equity shares of the Company which are held in abeyance under
the provisions of Section 206A of the Act or otherwise shall pending allotment or
settlement of dispute by order of Court or otherwise, be held in abeyance by the Company.5.
    
    TERMS AND CONDITIONS OF THE DEBENTURES5.1
    
    The Debentures shall be issued on terms and conditions consistent with the principal
terms and conditions set out in Annexure Iand as set out in the Scheme. The Board shall
appoint a debenture trustee (Debenture Trustee)who will be authorised to formalise with
the Company detailed terms and conditions for issue of Debentures.5.2
    
    As soon as practicable after the issuance of the Debentures, the Company shall take
necessary steps towards listing the Debentures on the Bombay Stock Exchange and/ or the
National Stock Exchange, with a  view to provide liquidity to the Debenture holders. The
Debentures will not be registered in any jurisdiction or listed on any stock exchange
outside India.6.
    
    PROCESS FOR ISSUANCE OF DEBENTURES AND LIQUIDITY FACILITY6.1
    
    The Debentures shall be issued within a period of 20 Working Days from the Record Date
to the Members eligible to receive the same, in the following manner:
 (i)
    
    The Company will deliver an
amount of not less than Rs. 506,00,00,000/-
(Rupees Five Hundred and Six Crores Only) but not exceeding Rs. 520,00,00,000/-
(Rupees Five Hundred and Twenty Crores Only), being equal to the aggregate value of
the Debentures required to be issued in terms of the Scheme, to a merchant banker to
be appointed by the Board (Merchant Banker)to act on behalf of and as agent and
trustee of the members. The Merchant Banker shall receive the aforesaid amount,
subject to receipt of necessary regulatory approvals, in an on-shore escrow account
opened by it with a scheduled commercial bank in India to be determined by and upon
terms and conditions acceptable to the Board, for this purpose (the Escrow
Account). The Merchant Banker shall receive the aforesaid amounts in the Escrow
Account for and on behalf of and in trust for the Members entitled to the
Debentures, as deemed dividend within the meaning of the term under Section 2 (22)
(b) of the Income Tax Act, 1961.
The said payment to the Merchant Banker shall constitute a valid and proper discharge
of the Companys obligation to make payment hereunder to each Member entitled to such
Debentures in terms of the Scheme.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  6




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(ii)
    
    The Merchant Banker shall immediately following receipt of funds pursuant to the
above, pay to the Company (without any lien, hold-back or deduction whatsoever), for
and on behalf of and as trustee of the Members entitled to Debentures, out of the
Escrow   Account, as and by way of subscription for allotment of requisite number of
Debentures. The said payment for and on behalf of the Members by the Merchant Banker
shall be  deemed to be a payment by the Members entitled to the Debentures under this
Scheme towards the cost of acquisition of the Debentures under the Scheme. Thus, the
cost of acquisition of each Debenture at the hands of the Members shall be deemed to be
its face value, i.e. Rs. 5/- (Rupees Five Only) each.(iii)
    
    Upon receipt by the Company of the payment from the Merchant Banker for and
on behalf of the Members towards subscription of Debentures of the Company, the
Company shall proceed to issue and allot to the Members as on the Record Date, the
appropriate number of Debentures to which the concerned Member may be entitled by
virtue of his/ her/ its holding in the Company on the Record Date in the ratio
stipulated in Clause 4.2 above.
 The Debentures issued to the Members pursuant to this Scheme shall be issued in
dematerialized form to the Members who are recorded as holding equity shares of the
Company in dematerialized form, or from whom the Company has received a notice in writing
prior to the Record Date of details of their account with a depositary participant and who
have provided details thereof and such other confirmations as may be required, by direct
credit to the account of such Member. For all other Members or in the event that the
Company is unable to credit the demat accounts of the aforesaid Members, the Company shall
issue Debentures in physical form to such Member. No letter of allotment would be issued
for the Debentures.6.2
    
    With a view to providing additional liquidity, the Company intends to identify a merchant
banker (Liquidity Facility Provider)to provide a liquidity facility to all Debenture
holders to, at their option, tender their Debentures for sale (on a spot delivery basis)
to the Liquidity Facility Provider at a price to be offered by the
Liquidity   Facility
Provider. The price to be offered by the Liquidity Facility Provider will depend on a
number of factors, including the coupon rate of the Debentures, the prevailing market
conditions and investor demand for the Debentures at
that time. The detailed terms and process for the Liquidity Facility will be formulated by
the Liquidity Facility Provider in consultation with the Company, and intimated to the
Members by the Liquidity Facility Provider.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  7




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7.
    
    NON RESIDENT MEMBERS AND ADRs7.1
    
    The approval of the Reserve
Bank of India (RBI) may be required under applicable law for
issuance of Debentures to certain non-resident Members, including for the holding or transfer
of Debentures by such Members and repatriation of sale proceeds, and in the case of the
Depositary, for distribution of the Debentures to the ADR holders. The Company shall apply to
the RBI for the requisite approvals for issue and allotment of Debentures to such non-resident
Members of the Company, and the issuance and allotment to such Members will be made subject to
and in compliance with the terms and conditions as may be prescribed by the RBI.7.2
    
    The regulatory framework in India governing issuance of ADRs by an Indian Company does not
permit the issuance of ADRs with any debt instrument (including non convertible rupee
denominated debentures) as the underlying security. Therefore, the Depositary cannot issue
depositary receipts (such as ADRs) against these Debentures under this Scheme. Accordingly,
upon the coming into effect of this Scheme and subject to receipt of necessary approvals (as
set out in 7.1 above), the Company shall issue an appropriate number of Debentures, in
accordance with the ratio mentioned in Clause 4.2, to the Depositary and the Depositary will
make best efforts to, and if so required for regulatory reasons shall, sell such Debentures
(via private or public sale or through the Liquidity Facility) in accordance with the
provisions of the Deposit Agreement.7.3
    
    To the extent the Depositary is able to sell (via private or public sale or through the
Liquidity Facility) the Debentures, subject to the provisions of the Deposit Agreement, the
Depository shall convert the net proceeds from any such sale into U.S. dollars and distribute
any such U.S. dollars, less any applicable taxes, fees and expenses incurred and/or provided
for under the Deposit Agreement, to the registered holders of ADRs entitled thereto in the
same manner as it would distribute cash under the Deposit Agreement.7.4
    
    The Company, the Liquidity Facility Provider and/or the Merchant Banker shall enter into such
other agreements or arrangements and take such further actions as may be deemed necessary or
appropriate by the Company, including, but not limited to, disseminating certain notices and
intimations (including to relevant stock exchanges), press releases, certifications, and
information containing details of the Scheme, the
issuance of the Debentures, the Liquidity Facility and/or other information relating to the
Company and the Debentures.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  8




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8.
    
    EMPLOYEE STOCK OPTION SCHEMES8.1
    
    Pursuant to the Stock Option
Scheme 2002, certain employees of the  Company have been granted
stock options at a price equivalent to (depending on the category of the option) the fair
market value of the underlying equity shares on the date of grant or the par value of the
underlying equity shares.8.2
    
    The existing exercise price for outstanding stock options granted at fair market value under
the Stock Option Scheme 2002, may, upon effectiveness of the Scheme, at the discretion of the
Compensation Committee be reduced by up to an amount of Rs. 30/- (Rupees Thirty Only) and
consequently, any shares issued pursuant to exercise of such options shall not be entitled to
receive the Debentures. For the avoidance of doubt it is clarified that no adjustment will be
made to the purchase price of the stock options granted at par value under the Stock Option
Scheme 2002. The consent of the Members to this Scheme shall be sufficient for the purposes of
effecting such adjustment and shall be treated as their consent in relation to the aforesaid
matters pertaining to the Stock Option Scheme 2002 (including without limitation for the
purposes of effecting necessary modifications to the Stock Option Scheme 2002) and all related
matters. No further approval of the Members would  be required in this connection.9.
    
    AMENDMENT TO ARTICLES OF ASSOCIATION9.1
    
    As an integral part of the Scheme, and, upon the coming into effect of the Scheme, Article
144(1) to Article 144(5) of the Articles of Association of the Company shall, without any
further act or deed, be replaced by the following:
 1.
    
    Any General Meeting may resolve that any monies, investments or other assets
forming part of the undivided profits (including profits or surplus monies arising from
the realisation and where permitted by law, from the appreciation in value of any
capital assets of the company) or any amount standing to the credit of the Share Premium
Account or the Capital Redemption Reserve Account or the General Reserve or any other
reserve or fund of the company or in the hands of the company and available for dividend
may be capitalized. Any such amount (excepting the amount standing to the credit of the
Share Premium Account and/ or the Capital Redemption Reserve Account) may be capitalized
in either of the following ways, or partly in one way and partly in another:a. by the issue and distribution as fully paid up shares, debentures, debenture stock or
other securities or obligations of  the Company; or
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  9




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b. by crediting the shares of the company which may have been issued and are not fully paid
up, with the whole or any part of the sum, remaining unpaid thereon.Provided that any amounts standing to the credit of the Share  Premium Account may be
applied in:i. paying up unissued shares of the company to be issued to the members of the company as
fully paid bonus sharesii. in writing off the preliminary expenses of the companyiii. in writing off the expenses of, or the commission paid or discount allowed on any issue
of shares or debentures of the company; oriv. in providing for the premium payable on the redemption of any redeemable preference
shares or debentures of the company.Provided further that any amount standing to the credit of the Capital Redemption Reserve
Account shall, for the purposes of this Article, be applied only in paying up unissued
shares of the Company to be issued to the members of the Companyas fully paid bonus
shares.2.
    
    Such issue and distribution under sub-clause (1)(a) above and such payment to the credit of
unpaid share capital under sub-clause (1)(b) above shall be made to, amongst or in favour of
the members entitled thereto and in accordance with their respective rights and interests and
in proportion to the amount of capital paid up on the shares held by them respectively in
respect of which such distribution under such-clause (1)(a) or payment under sub-clause (1)(b) above shall be made on the footing that such members become entitled thereto as capital.3.
    
    The Directors shall give effect to any such resolution and apply such portion of the profit,
General Reserve Fund or any other fund or account as aforesaid as may be required for the
purpose of making payment in full for the shares, debentures or debenture stock, or other
securities or obligations of the Company so distributed under sub-article (1)(a) above or (as
the case may be) for the purpose of paying, in whole or in part, the amount remaining unpaid
on the paid up capital under sub-article (1)(a) above provided that no such distribution or
payment shall be made unless recommended by the Directors and if so recommended such
distribution and payment shall be accepted by such members as aforesaid in full satisfaction
of their interest in the capitalised sum.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
  10




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4.
    
    For the purpose of giving effect to any such resolution the directors may settle any
difficulty which may arise in regard to the distribution or payment as foresaid as they think
expedient and in particular they may issue fractional certificates or coupons and fix the
value for distribution of any specific assets and may determine
that such payments be made to any members on thefooting of the value so fixed and that
fraction of less value than Rs. 1/- may be disregarded in order to adjust the right of
all parities and may vest any such cash, shares, fractional certificates or coupons,
debentures, debenture-stock, or other securities or obligations in
trustee upon such trust for the persons entitled thereto as may seem expedient to
the Directors and generally may make such arrangement for the acceptance, allotment
and sale of such shares, debentures, debenture-stock, or other securities or
obligations and fractional certificates or coupons or otherwise as they may think
fit.5.
    
    Subject to the provisions of the Act and these Articles in case where some of
the shares of the Company are fully paid and others are partly paid only, such
capitalisation may be effected by the distribution of further shares in respect of
the fully paid shares, and/or by crediting the partly paid shares with the whole or
part of the unpaid liability thereon but so that between the holders of the fully
paid shares, and the partly paid shares the sum so applied in payment of such
further shares and in the extinguishing or diminishing of the liability on the
partly paid shares shall be applied prorata in proportion to the amount then already
paid or credited as paid on the existing fully paid and partly paid shares
respectively.
 9.2
    
    It is hereby clarified that the consent of the shareholders to the Scheme shall be
sufficient for the purposes of effecting the above amendment to the Articles of
Association of the Company as set out in Clause 9.1 above as also for the issuance of the
Debentures, and no further resolution under Section 31 or any other applicable provision
of the Act in this regard, would be required to be separately passed in connection with
the amendment to the Articles or the issuance of Debentures by the Company hereunder.10.
    
    Accounting treatment in the books of the Company10.1
    
    The proposed restructuring of the General Reserve by issuance of Debentures pursuant to
the Scheme shall be reflected in the books of account of the Company in the following
manner.
 (a)
    
    an amount representing the aggregate face value of the Debentures shall be
transferred from the General Reserve Account to the Shareholders Account (being the
deemed dividend payable to the Members under the Scheme); and(b)
    
    an amount representing the aggregate face value of the Debentures shall be
transferred from the Shareholders Account (represented by the Merchant Banker) to
the Bank Account (being payment effected to the Members as deemed dividend under
the Scheme).
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
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10.2
    
    The payment by the Company of the dividend distribution tax on the Debentures will be
reflected in the books of account of the Company in the following manner:
 (a)
    
    an amount representing the dividend distribution tax payable on
the issuance of the Debentures shall be transferred from the General Reserve Account
to the Dividend Distribution Tax Account; and(b)
    
    an amount representing the dividend distribution tax payable on the issuance of
the Debentures shall be transferred from the Dividend Distribution Tax Account to the
Central Government Account (being payment of dividend distribution tax on the
Debentures).
 10.3
    
    Similarly, the proposed investment of the deemed dividend in Debentures of the Company for
and on behalf of the Members by a payment through the Merchant Banker will be reflected in the
books of account of the Company in the following manner:
 (a)
    
    an amount representing the aggregate face value of the Debentures shall be
transferred from the Bank A/c to the Shareholders A/c (represented by the Merchant
Banker), (being payment by the Merchant Banker for and on behalf of the Members towards
reinvestment of deemed dividend); and(b)
    
    an amount representing the aggregate face value of the Debentures shall be
transferred from Shareholder A/c to Debentures A/c (being investment of the Members in
Debentures under the Scheme).
 10.4
    
    For removal of doubts, it is expressly recorded and clarified that issue of Debentures
constituting deemed dividend does not in any manner involve distribution of Capital Reserves
or revenue reserves other than General Reserve and the Debentures shall be issued and shall be
deemed to have been issued entirely out of the General Reserve of the Company exclusively
built through undistributed/ retained profits of the Company, in the manner provided in the
Scheme.10.5
    
    Post the issuance of the Debentures under this Scheme, the General Reserve of the Company
will stand reduced by an amount equivalent to the aggregate value of the Debentures issued (up
to Rs. 520,00,00,000/- (Rupees Five Hundred and Twenty Crores Only) and an amount equivalent
to the dividend distribution tax payable by the Company on
the Debentures, at the then applicable rate (on such value of debentures, as above). Costs,
charges and expenses of this Scheme as referred to in Clause 19 shall also be adjusted by a
corresponding transfer from the General Reserve.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
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11.
    
    Scheme Conditional on Approvals/ SanctionsThe Scheme is conditional on and subject to:
 (a)
    
    the approval to the Scheme by the requisite majority of the Members of the
Company as prescribed under law;(b)
    
    the sanction of the High Court being obtained;(c)
    
    the requisite approval of the Reserve Bank of India being obtained under the
provisions of Foreign Exchange Management Act, 1999 and the regulations made thereunder;(d)
    
    any other sanction or approval, as may be required by law in respect of the
Scheme being obtained; and(e)
    
    the certified copies of the High Court order referred to in this Scheme being
filed with the Registrar of Companies, Hyderabad.
 12.
    
    Effect Of Non Receipt of Approvals/ SanctionsIn the event of any of the aforesaid sanctions and approvals not being obtained and/ or the
Scheme not being sanctioned by the High Court and/ or the Order or Orders not being passed
as aforesaid on or before March 31, 2011 or within such extended period or periods as may
be approved by the Board, the Scheme shall become null and void and in that event, no
rights and liabilities shall accrue to or be incurred by the Company or its shareholders or
any other person, and Company shall bear and pay the costs, charges and expenses for and/
or in connection with the Scheme.
 PART III  GENERAL TERMS AND CONDITIONS
 13.
    
    Dividends13.1 Nothing contained herein shall be construed as restricting the Company from being entitled
to declare and pay dividends, whether interim or final, to its shareholders whether during
the pendency of the Scheme or otherwise and the holders of the shares of the Company shall,
save as expressly provided otherwise in this Scheme, continue to enjoy their existing rights
under their respective Articles of Association including the
right to receive dividends.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
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13.2
    
    It is clarified that the aforesaid provisions in respect of declaration of dividends are
enabling provisions only and shall not be deemed to confer any right
on any member of  the
Company to demand or claim any dividends which, subject to the provisions of the said Act,
shall be entirely at the discretion of the boards of directors of the Company and subject to
the approval, if required, of the shareholders of the Company.14.
    
    The Scheme is an arrangement between the Company and its Members under Section 391 of the Act
and does not envisage transfer or vesting of any properties and/or liabilities to or in favour
of a transferee company as contemplated in Section 394 of the
Act. The Scheme does not involve
any conveyance or transfer of any property and does not relate to amalgamation or merger
of companies under the order of the High Court under section 394 of the Act, and consequently,
the Order of the Honble High Court approving the Scheme will not attract any stamp duty,
under the Indian Stamp Act, 1899 (as applicable in the state of Andhra Pradesh).15.
    
    The Scheme and issuance of Debentures hereunder is intended exclusively for the Members of
the Company and does not constitute an offer or an invitation to the public to subscribe to
the Debentures. Neither the Scheme nor any related document shall constitute an offer document
or prospectus in any manner or for any purpose whatsoever.16.
    
    APPLICATIONS TO HONBLE HIGH COURTThe Company shall make necessary applications before the High Court for the sanction of this
Scheme under Sections 391 and 394 of the Act.17.
    
    MODIFICATIONS/ AMENDMENTS TO THE SCHEME AND REMOVAL OF DIFFICULTIES
 (a)
    
    The Company (by its Board) may, in its full and absolute discretion, assent to
any alteration or modification to this Scheme which the Board deems fit, or which the
High Court and/or any other authority may deem fit to approve or impose.(b)
    
    The Company (by its Board) may give such directions as it may consider necessary
to settle any question or difficulty arising under the Scheme or in regard to and of the
meaning or interpretation of the Scheme or implementation hereof or in any matter
whatsoever connected therewith (including any question or difficulty arising as a result
of inadequacy of information provided by a Member or in connection with the issuance of
Debentures or in connection with
any deceased or insolvent shareholders, depositors or Debenture-holders of the
Company), or to review the position relating to the satisfaction of various conditions
to the Scheme and if necessary, to waive any of those (to the extent permissible under
law) or that otherwise as may be considered to be in the best interest of the Company
and its Members and do all acts, deeds and things as may be necessary, desirable or
expedient for giving effect to the Scheme.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
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(c)
    
    In the event of there being any pending share transfers, whether lodged or
outstanding, of any shareholder of the Company, the Board or any person authorized by
the Board shall be empowered in appropriate cases, prior to or even subsequent to the
Record Date, to effectuate such a transfer as if such changes in registered holder
were operative as on the Record Date, in order to remove any difficulties arising to
the transferor or transferee of the share in the Company and in relation to the
issuance of the Debentures after the effectiveness of the Scheme.
 18.
    
    Severability18.1
    
    If any part of this Scheme is found to be unworkable for any reason whatsoever including by
reason of order of a court or regulatory authority or any legislative amendment, the same
shall not, subject to the decision of the Company affect the validity or implementation of
the other parts and/or provisions of this Scheme.19.
    
    Expenses Connected with the SchemeAll costs, charges and
expenses of the Company in relation to or in connection with the
Scheme and of carrying out and implementing/ completing the terms and provisions of the
Scheme and/ or incidental to the completion thereof in pursuance of the Scheme, including
the fees in connection with the appointment of the Merchant Banker and opening of the
Escrow Account, if any, shall be borne and paid by the Company. For the avoidance of doubt
it is clarified that Members will be required to bear and pay all taxes as may be
applicable to them in relation to the Debentures.20.
    
    BINDING EFFECTThis Scheme when sanctioned by the High Court and upon effectiveness shall be binding on
the Company, all its creditors, members and all other persons.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
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ANNEXURE I
 Principal Terms and Conditions of Issue of unsecured redeemable non convertible bonus
Debentures
 1. Issuer
    
    :
    
    Dr. Reddys Laboratories Limited2. Quantum
    
    :
    
    Not less than Rs. 5,06,00,00,000/-
(Rupees Five Hundred Six Crores Only) but not
exceeding Rs. 520,00,00,000/- (Rupees Five Hundred and
Twenty Crores Only), through issue of Debentures.3. Instrument
    
    :
    
    Unsecured redeemable non
convertible fully paid bonus debentures4. Tenor
    
    :
    
    36 months from the date of allotment5. Redemption
    
    :
    
    Redeemable at par in full at the end
of 36 months from the date of allotment6. Face value
    
    :
    
    Rs. 5/- (Rupees Five Only) per
Debenture7. Market lot
    
    :
    
    1 Debenture(s), or as required by
the stock exchanges9. Coupon Rate
    
    :
    
    The coupon rate will be as
determined by the Board.10. Interest payments
    
    :
    
    At the end of each 12 calendar
month period from the date of allotment on the
unredeemed balance of each Debenture.11. Taxation
    
    :
    
    All payments of principal and interest
in respect of the Debentures to be made less any
deductions or withholding for or on account of any
present or future taxes or duties as required by
applicable laws.12. Rating
    
    :
    
    Proposed to be rated14. Listing
    
    :
    
    Proposed to be listed on the NSE
and/ or BSE15. Debenture Trustee
    
    :
    
    A debenture trustee shall be
appointed by the Board.
 For Dr. REDDYS LABORATORIES LTD./s/ V S SureshV S SURESHCOMPANY SECRETARY
 
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